In a recent decision, the Regional Director of the Western Region, Ministry of Corporate Affairs (MCA), Mumbai, upheld a penalty of ₹5 lakh imposed on Kudos Finance and Investments Private Limited. This penalty pertains to an appeal against an order issued by the Registrar of Companies (ROC), Pune, for non-compliance with the Companies Act, 2013. Specifically, the issue revolved around the submission of unsigned attachments with Form AOC-4 for the financial year 2020-21.
Background of the Case Kudos Finance and Investments Private Limited, along with its directors—Pavitra Pradip Walvekar, Swati Jindal, Audumbar Dattatray Raut, and Naresh Vigh—filed an appeal under Section 454(5) of the Companies Act, 2013. The appeal contested the ROC Pune’s adjudication order dated 09/02/2024, which imposed penalties for contraventions of Section 134(6) of the Act.
The penalties were levied as follows:
- Company: ₹3,00,000
- Each Director: ₹50,000
Grounds of Appeal The appellants argued that:
1. The ROC’s order was unjust and contrary to established norms.
2. The penalty impeded the government’s ‘Ease of Doing Business’ vision.
3. Genuine explanations for the non-compliance were not considered.
4. The company had not generated income for two years.
5. The non-compliance was unintentional.
The appellants sought the quashing of the adjudication order and the discharge of penalties.
Hearing and Submissions During the hearing on 02/07/2024, Anil Kumar Dhanotiya, a Practicing Company Secretary, represented the appellants. He acknowledged the contravention but emphasized that while Form AOC-2 was not signed, other required documents were duly signed and stamped. The appellants contended that this oversight should not warrant severe penalties.
Legal Framework and ROC’s Findings Section 134(6) of the Companies Act mandates that certain documents, including attachments to Form AOC-4, must be signed. The penalty for non-compliance is outlined in Section 134(8), which prescribes:
- A penalty of ₹3 lakh for the company.
- ₹50,000 for each defaulting officer.
The ROC’s inquiry revealed that while most documents were signed, Form AOC-2 was not, leading to the penalty imposition.
Regional Director’s Ruling The Regional Director, Santosh Kumar, reviewed the appeal and the ROC’s report. The Director concluded that the penalties were in accordance with the Companies Act. The appeal was deemed to lack merit as the appellants had admitted to the oversight and provided no new substantive evidence to overturn the adjudication order.
The order stated that:
1. The appeal was dismissed.
2. The appellants were directed to pay the imposed penalties within 90 days.
3. Failure to comply would result in prosecution under Section 454(8) of the Companies Act, 2013.
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BEFORE THE REGIONAL DIRECTOR, WESTERN REGION
MINISTRY OF CORPORATE AFFAIRS, MUMBAI
Order No. Kudos Finance/134(6)/F94308111/2023-24/5826-5830 Dated: 16th July 2024
APPEAL UNDER 454(5) OF COMPANIES ACT, 2013 AGAINST ORDER PASSED FOR OFFENCES COMMITTED UNDER SECTION 134 OF THE COMPANIES ACT, 2013.
In the matter of KUDOS FINANCE AND INVESTMENTS PRIVATE LIMITED & ORS
| 1. | Kudos Finance and Investments Private Limited | Company |
| 2. | Pavitra Pradip Walvekar | Additional Director |
| 3. | Swati Jindal | Director |
| 4. | Audumbar Dattatray Raut | Director |
| 5. | Naresh Vigh | Director |
…Appellants
Through: Anil Kumar Dhanotiya, Practicing Company Secretary.
HON’BLE REGIONAL DIRECTOR (WESTERN REGION)
ORDER
Appeal under sub-Section (5) of Section 454 of the Companies Act, 2013 (Act) r/w the Companies (Adjudication of Penalties) Rules, 2014 (Rules) has been filed by ‘Kudos Finance and Investments Private Limited’ (Company) having CIN
U65910PN2009PTC148795 and, its Officers, against Order No. RoCP/ ADJ/134/ 2023-24/KUDOS/8(v)/B/ 2859 dated 09/02/2024 (ROC Order) of Registrar of Companies, Pune for violating provisions of Section 134(6) of the Companies Act, 2013.
2. The appeal lies within the jurisdiction of the Regional Director, Western Region, Ministry of Corporate Affairs, Government of India.
3. The Registrar of Companies, Pune (RoC Pune) vide Adjudication Order dated 09/02/2024 imposed penalty under Section 134(8) of the Act as the company has filed Form AOC-4 for Financial Year 2020-21 on MCA portal with the attachments, however such attachments were not signed as required under Section 134(6) of the Act:
| Sr.No. | Penalty imposed on Company / Director (s) | Penalty imposed (In Rs.) |
| 1 | Kudos Finance and Investments Private Limited | 3,00,000 |
| 2 | Pavitra Pradip Walvekar | 5000 |
| 3 | Swati Jindal | 50,000 |
| 4 | Naresh Vigh | 50,000 |
| 5 | Audumbar Dattatray Raut | 50,000 |
| TOTAL | 5,00,000 |
4. Appellants have filed Form-AD) vide SRN F94308111 dt.05/04/2024. As per provisions of sub-Section (6) of Section 454, every appeal under sub-section (5) shall be filed within sixty (60) days from the date on which the copy of the order made by the adjudicating officer is received by the aggrieved person. On examination of the application/appeal, it is seen that the said application/appeal has been filed within 60 days from the date of passing of the adjudication order.
5. Grounds of Appeal & Relief sought:
a) The Learned Respondent (ROC) has acted in a manner which is contrary to well-established norms of dispensing justice.
b) The Order under appeal is erroneous.
c) The order under appeal is a hindrance to the vision of Hon’ble Prime Minister of India who promises to deliver ‘Ease of Doing Business’ in India.
d) The Order under appeal has been passed without considering the genuine explanations given by the Appellants(s).
e) The Appellants are unable to generate any income since last 2 years.
f) The non-compliances have occurred without any malafide intention.
g) Quash/set aside the Adjudication Order passed by the ROC.
h) Discharge the company and its officers without any cost or penalty to order.
6. The matter was posted for hearing as per Section 454(5) r/ w Section 454(7) of the Act on 02/07/2024. Anil Kumar Dhanotiya, Practicing Company Secretary appeared on behalf of Appellants as their authorized representative. The authorized representative reiterated the submission made by the applicants in their application and have admitted the contravention of Section 134(6) of the Companies Act, 2013. However, he submitted that the Board’s Report and any annexures thereto were signed and were attached with Form AOC-4 filed by the company for Financial Year 2020-21 except Form AOC-2 which was inadvertently missed to be signed. The Learned PCS further submitted that a round stamp of the company was duly affixed upon it making it a genuine document.
7. That the punishment for contravention of section 134(6) is prescribed under section 134(8) of the Companies Act, 2013 which states that “If a company is in default by complying with the provisions of this section, the company shall be liable to a penalty of three lakh rupees and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees.”
8. Facts of the Case:
a) An inquiry was conducted by the Inspecting Officer (JO) and during the inquiry, it was observed that the company has filed Form A0C-4 for Financial Year 2020-21 on MCA portal with the attachments, however such attachments are not signed. The Board’s Report and any annexures thereto under sub-section (3) shall be signed by its chairperson of the company if he is authorized by the Board and where he is not so authorized, shall be signed by at least two Directors, one of whom shall be Managing Director, or by the director where there is one director. Thus, the directors and company have failed to comply with the provisions of Section 134 of the Act and are liable for penal action under Section 134(8) of the Act.
b) ROC vide his further report dt.01/07/ 2024 has concluded that the company has accepted the contravention of Section 134(6) of the Act and therefore the grounds made by applicants in their submissions are not tenable.
In view thereof, there is no inherent defect in the Adjudication Order dt. 09/02/2024 and the same is in accordance with the provisions of the Act.
9. Taking into consideration the Adjudication Order of the Registrar of Companies, Pune; submissions made by the Appellants in their application, oral submissions of authorized representative during the hearing and further report of ROC dt.01/07/2024; I am of the considered view that there is no merit in the appeal, and accordingly, the Adjudication Order dated 09/02/2024 passed by ROC, Pune is ‘Confirmed’.
10. In view of the above, the present appeal is dismissed with directions to the appellants to pay penalty imposed by the Registrar of Companies, Pune vide Adjudication Order dt. 09/02/2024 within 90 days, failing which, Registrar of Companies, Pune, is directed to file prosecution under Section 454(8) of the Companies Act, 2013.
A copy of this order shall be published on the website of the Ministry of Corporate Affairs as per Rules.
Sided and sealed on 16thday of July 2024.
(SANTOSH KUMAR)
REGIONAL DIRECTOR
WESTERN REGION, MUMBAI
